BHIKARAM PANAJI CHOUDHARY,MUMBAI vs. INCOME TAX OFFICER 19(1)(2), MUMBAI

This appeal by assessee is directed against the order of ld. Commissioner of Income-tax(Appeals)-51, Mumbai [ld. CIT(A)] dated 04/01/2018 for Assessment Year 2010-11. The assessee has raised following Grounds of appeal.

The Assessing Officer proceeded for reassessment proceedings. During the assessment assessee was confronted about bogus hawala bills from whom assessee had shown purchases of Rs.91,94,172/-. The assessee was asked to produce/furnish supporting evidence and to provide all the material evidence to prove the genuineness of purchase and to produce the parties for verification along with their books of account. The assessee showed his inability to produce the parties for verification. However, the assessee furnished copy of purchase bill and other documentary evidence along with his written submission dated Bhikram Panaji Choudhary 28/12/2015 and contended that purchase made by the assessee are genuine. The contention of the assessee was not accepted by the Assessing Officer holding that the assessee failed to discharge his onus to prove the genuineness of the purchase. The Assessing Officer disallowed 12.5% of the purchases shown from M/s. Anand Deep Metal; M/s. Mona Metal/Metalex Metal Corporation and M/s. Monu Metal.

On appeal before the ld. CIT(A) the re-opening was upheld, however, the addition/disallowance on account of bogus purchases was restricted to 9% of the bogus/impugned purchases. Further, aggrieved the assessee has filed the present appeal before us.

None, appeared on behalf of assessee, despite service of notice through RPAD. Considering the fact that neither the assessee nor its representative appeared nor move any adjournment application, therefore, we were left with no other option except to hear the ld. DR for the revenue and decide the case on merits after going through the available material on record. The DR for the revenue supported the order of CIT(A). The DR further submits that the Sales tax department, Govt. of Maharashtra and the Investigation Wing of Income tax department made a full-fledged enquiry with regard to hawala dealers who were indulging in providing accommodation entries without delivery of goods. The assessee has shown purchases from such parties whose names Bhikram Panaji Choudhary appear in the list of hawala dealers. The name of the assessee is also shown in the list of such beneficiary. The assessee merely obtained accommodation bills only to inflate expenses and bring out the profitability in order to avoid tax. The ld. DR further submits that CIT(A) has already given sufficient relief to the assessee.

We have considered the submission of ld. DR and orders of the authorities below. We have seen that the Assessing Officer made addition /disallowance of 12.5% of the purchases shown by the assessee from bogus/tainted dealers. The ld. CIT(A) sustained the addition @ 9% of the bogus purchases, on his observation that the assessee has reconciled the alleged hawala purchases with corresponding sales. The ld. CIT(A) after considering the rate of sales tax prevalent in the State of Maharashtra granted partial relief to the assessee and sustained addition @ 9% of the bogus purchases. We have further examined the order of the authorities below. We are of the view that even in case transaction is not verifiable due to any reason the income tax department is entitled to tax the income component of the transaction. In our view the disallowance sustained by the ld. CIT(A) is reasonable one to suspect the element of revenue leakage, which we confirm. The assessee neither came forward nor did it place any material before us to take any contrary view. Ground is dismissed.